Arbitrum Nitro Launch with Steven Goldfeder & Harry Kalodner

On today's episode, we welcome back Steven Goldfeder and Harry Kalodner for their second appearance on Bankless. Both times for huge Arbitrum launches! Today, Abritrum is launching Arbitrum Nitro, a 7x improvement to Ethereum's capacity. Hear all about it, Abritrum's potential forthcoming token(?!), Abritrum Oddessey, and of course, so much more. ------ Chainlink | Register for SmartCon 2022 with promo code “BANKLESS” https://bankless.cc/smartcon ------ SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ ️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: LENS | ACCESS CODE: MINTME https://bankless.cc/Lens ROCKET POOL | ETH STAKING https://bankless.cc/RocketPool ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave JUNO | BRIDGE FIAT TO LAYER 2 https://bankless.cc/Juno ️ ZKSYNC | THE LAYER 2 SCALING ENDGAME https://bankless.cc/zkSync ----- Timestamps: 0:00 Intro 6:55 Abritrum Nitro Launch Day 10:40 Reflecting on Arbitrum's Last Year 14:57 Abritrum's Rollup 16:57 The Arbitrum Odyssey 26:55 The Secret Sauce Behind Nitro 30:39 Any Trade-Offs Made? 32:18 Scale Restraints 37:38 What's Next? 47:28 Arbitrum Nova 52:53 Fractals 54:55 What Reddit is Building on Arbitrum Nova 1:01:23 zkRollups 1:04:17 The Abritrum App Layer 1:07:11 Abritrum's Hypothetical Ticker 1:09:38 Other Tech Checkboxes 1:11:34 Closing & Disclaimers ----- Resources: Harry Koladner https://twitter.com/hkalodner Steven Goldfeder https://twitter.com/sgoldfed Steven & Harry's First Appearance on Bankless https://youtu.be/W33LtejihY8 ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:11Ryan Sean Adams?

  Hey Bankless Nation, welcome to another episode of State of the Nation. Super exciting topic to discuss today. That is the release. It just happened. Just a few minutes prior to us getting on the livestream, hitting record. Arbitrum Nitro launched. Arbitrum, of course, you guys remember. That is an Ethereum rollup, the largest to date in terms of total locked value. And they just released a major upgrade. We're going to talk about that. We're going to talk about what's so special about it. We're going to talk about how it's scaling Ethereum. And there's a lot more. David, what else are we going to cover this episode with Harry and Stephen from Arbitrum?

• 0:50David Hoffman?

  Ryan, I opened up the YouTube just now, just to do what I'd normally do and monitor the livestream. And out of the 12 or 13 comments, I mean, eight of them were when token, when Arby token. And so I am of course going to ask the Arbitrum team, when token? At the very end.

• 1:08Ryan Sean Adams?

  As is tradition.

• 1:08David Hoffman?

  Very, very end. So all the people are going to have to stick around to the very end of the show in order to hear these questions. But there are also some other developments, not just in the Arbitrum 1 ecosystem. Because Arbitrum 1 is no longer the one and only Arbitrum chain. There is a new Arbitrum chain, Arbitrum Nova.

• 1:24Ryan Sean Adams?

  Arbitrum 2?

• 1:25David Hoffman?

  Arbitrum, no, no, nope. But there's plenty of details to unpack with Arbitrum Nova. And so so much going on in the Arbitrum ecosystem. And we're going to unpack it all here today on the State of the Nation.

• 1:37Ryan Sean Adams?

  It's going to be exciting to talk about. Also, a message from our sponsor and our friends at SmartCon. This is a conference put on by the folks at Chainlink. We love this conference. I've attended it virtually because it's only been virtual. But this year, it's the first year, it's actually in person. It is happening September 28th to 29th in David's new hometown of New York City. Look at the speaker list, David. Read some of these names out for people.

• 2:01David Hoffman?

  Got Eric Schmidt, the former CEO of Google, Sergey Nazarov of Chainlink, Balaji from Bankless Podcast, just getting CTO of Coinbase.

• 2:10David Hoffman?

  Sam Bankman-Fried from FTX, we got Kane from, Kane and Stani from Synthetix and Ave, and of course, Ed Felton, co-founder of Arbitrum, not on the show today, but on the Arbitrum team, of course, as well, all showing up for SmartCon in New York in person. There's a link in the show notes if you want to get your ticket, and if you want your ticket to be costing less money, you can use the code BANKLESS to have a discount.

• 2:33Ryan Sean Adams?

  I want that.

• 2:33David Hoffman?

  Yeah.

• 2:34Ryan Sean Adams?

  The goal of Bankless Discount, we're hooking you guys up. That's bankless.cc/smartcon. That'll get you that discount if you type in BANKLESS where they ask for the code. David, got to start with a question I always ask in each one of these episodes, what is the state of the nation today?

• 2:50David Hoffman?

  Ryan, the state of the nation is upgrading, upgraded. And this is also a slight disclaimer, the Bankless livestream ecosystem has gotten a facelift. And so there are now many more buttons for me to DJ this livestream, and there's many more like things, and it's overall better and more complicated, I'd say.

• 3:09Ryan Sean Adams?

  Are you saying it's been upgraded?

• 3:11David Hoffman?

  It's been upgraded, it's been upgraded. And so if the stream gets weird, I'm sorry about that, but we were also recording locally, so no matter what, this podcast episode will happen. But not only is Arbitrum Nitro getting a huge upgrade, which is the main focus of the show, but this is also a disclaimer that the Bankless livestream infrastructure has also gotten upgraded, and it's a little bit overwhelming because it's the first time. So that's also a disclaimer.

• 3:34Ryan Sean Adams?

  There you go, two upgrades at the same time. So far, Arbitrum has been really successful, not a hitch. Hopefully, we have the same luck with the Bankless livestream today, David. And you know, it strikes me, it's not only Arbitrum and Bankless that's getting an upgrade, it's also Ethereum that's getting an upgrade. Whenever rollups improve, their technology to compress transactions, they get faster, they get cheaper, that's an upgrade to Ethereum. That's an upgrade for going Bankless, it makes Ethereum more scalable. So of course, we got to start there and talk about that right when we get back with Stephen and Harry from Arbitrum. But before we do, we want to thank the sponsors that made this episode possible.

• 4:13David Hoffman?

  Lens Protocol is an open-source tech stack for building decentralized social media applications. It is the new era for social media. We all have toxic relationships with our Web2 apps. We want to break up with them, but we can't. These applications own our digital lives and all the relationships that we've made. We need to break through to a new paradigm of social networking applications that we control, rather than them controlling us. Lens isn't a social media app. It's a protocol to let 1,000 Web3 social apps bloom. Lens is a permissionless and transparent social graph that is owned by the user. In crypto, we say "not your keys, not your crypto", and on Lens, we say "not your keys, not your profile". With Lens, your followers go with you to whatever social media application you want to use. And instead of being trapped by an algorithm chosen by that app, Lens lets you choose the way you want to experience your social media.

• 4:57David Hoffman?

  Lens is the last social media handle that you'll ever need to create. So in order to get started, there's a secret code word in the show notes. Enter that code word in the Google Form link, and you'll be well on your way to entering the world of Web3 social. Rocketpool is your decentralized Ethereum staking protocol. You can stake your ETH in Rocketpool and get our ETH in return, allowing you to stake your ETH and use it in DeFi at the same time. You can get 4% on your ETH by staking it with Rocketpool, but you can get even more by running a node. Rocketpool is the only staking provider that allows anyone to permissionlessly join their network of validating Ethereum nodes. Setting up your Rocketpool node is easier than running a node solo, and you only need 16 ETH to get started. You get an extra 15% staking commission on the pooled ETH that uses your node to stake. You also get RPL token rewards on top.

• 5:42David Hoffman?

  So if you're bullish ETH staking, you can boost your yield by adding your node to the decentralized Rocketpool network, which currently has over 1,000 independent node operators. It's yield farming, but with Ethereum nodes. You can get started at rocketpool.net, and you can also join the Rocketpool community in their Discord. You can find me hanging out there sometimes in the chat, so I'll see you there. Arbitrum is an Ethereum Layer 2 scaling solution that is going to completely change how we use DeFi and NFTs. Some of the coolest new NFT collections have chosen Arbitrum as their home, while DeFi protocols continue to see increased liquidity and usage. You can now bridge straight into Arbitrum for more than 10 different exchanges, including Finance, FTX, Huobi, and Crypto.com. Once on Arbitrum, you'll enjoy fast transactions with cheap fees, allowing you to explore new frontiers of the crypto

• 6:24David Hoffman?

  New to Arbitrum, for a limited time, you can get Arbitrum NFTs designed by the famous artists Ratwell and Sugoi for joining the Arbitrum Odyssey. The Odyssey is an eight-week-long event where you complete on-chain activities and receive a free NFT as a reward. Find out more by visiting the Discord at discord.gg/Arbitrum. You can also bridge your assets to Arbitrum at bridge.arbitrum.io and access all of Arbitrum's apps at portal.arbitrum-one in order to experience DeFi and NFTs the way it was always meant to be: fast, cheap, secure, and fiction-free.

• 6:56Ryan Sean Adams?

  Hey, guys, we are back with some of the co-founders behind Arbitrum, which is the leading roll-up right now in terms of total locked value. A big upgrade today. Want to introduce you again, because it's been a year, to Steven, who is the CEO and co-founder of Offchain Labs, and also Harry, who is the CTO and co-founder of Offchain Labs. Gentlemen, how you doing? Launch day again. How are things? Are you hanging in there? Are you sweating at all? Is everything going OK?

• 7:23Speaker 02

  Doing well, yeah. Thanks for having us. Really, really great to be back. I think the launch went fantastically well, and we're excited to be here and talk about it.

• 7:32Speaker 03

  I'm still not familiar with this concept of having a launch day and then having it be after the launch day and not being in a total panic. But it just goes to show, we spend a lot of time preparing and have an awesome team.

• 7:46David Hoffman?

  Usually, whenever we have people that come on on lunch day, they're like, running a mile a minute, like, they can't breathe, and then they come on to their podcast, and then they're super distracted, because there's also a bunch of stuff happening at the same time. Yeah, so like...

• 8:01Ryan Sean Adams?

  Lights are flashing.

• 8:01David Hoffman?

  What are you guys, like, what's behind the scenes? What's going on right now? Like, what are you guys monitoring? What are you guys, like, what would you otherwise be looking at if you weren't on this podcast with us?

• 8:11Speaker 02

  So, one thing is, we went back online, our core infrastructure. It will take others, some went back online already. EtherScan, for example, went rock up right away. A lot of the node providers did. Some other infrastructure will probably continue to come on over time, although I think most of it's already on. So, we're just basically monitoring partner questions and conversations, but really, honestly, not that much.

• 8:36Speaker 03

  Fundamentally, kind of the, our own tech is the thing that it's easy to be kind of highly confident in, and that we've done, we did the test net a month ago. We've kind of tested to death in all sorts of interesting ways. Um, that kind of the, the biggest effort this last month has been sort of ecosystem coordination, just because like, I don't need to tell you guys, there's a lot of stuff going on on top of Arbitrum. Um, and even with the Nitro upgrade being sort of quite seamless for most people, there's still enough kind of nitty gritty details that affect various specific applications and, and infrastructure providers, uh, that there's sort of a lot of coordination. And that's where we've been really focused. And, and that's where I think the sort of

• 9:17Speaker 03

  next day or two will be, will continue to be sort of very focused on kind of hearing feedback from there and, and solving any issues that might come up.

• 9:25Ryan Sean Adams?

  Yeah, I guess that's true. You're upgrading a, a platform for an entire set of applications, ecosystem, all of this infrastructure as, as well. And I'm sure there are so many moving parts there. Um, I, I want to zoom out, uh, for, for a minute too, because, um, this is actually a special day, not just because the Bankless livestream has been upgraded, although David's really excited about this, and Nitro has launched, but also because it is the one year birthday of Arbitrum 1, the original chain. So like, you guys launched this thing a year ago, which is like, first of all, happy birthday to Arbitrum. And secondly, I was kind of thinking about this, um, this is sort of, uh, at the end of last year,

• 10:07Ryan Sean Adams?

  I think it was the last time, uh, we had you guys for livestream on Bankless was like September or something of, of last year. And I remember how excited we are about, and we had this analogy of kind of like rollups are like a, a theme park. And like, there are all of these, these rides, but it's not yet open for the public. And now Arbitrum is about to open it for the public. And the cool thing about getting the theme park is once the gates are open, you can not only ride all the rides, but you can like, go make your own rides, like roller coaster tycoon style, if you're a developer, right? And so, um, just zoom out for us for a minute. How do you guys feel one year after launch? Has this gone how you thought it would?

• 10:49Ryan Sean Adams?

  Is it, um, as expected, or there's some unexpected things? Uh, Harry, why don't we start with you?

• 10:56Speaker 03

  Yeah, no, it's a it's a really interesting question, and I think it's just I instantly I'm thrown back to thinking about the insanity, which was kind of after our initial launch. Um, when we were expecting to kind of like gradually pick up steam. Um, and instead, if you remember RB Nyan, RB Nyan that launched about, I think, in the first week and very rapidly accumulated over a billion dollars in the system. Um, which was not something we were expecting. Um, and I think it was sort of, and it would, for a long time, I think essentially sort of. It it was it was downhill from there in a way, and that like, kind of like, that was like, you know, that was yield farming, that was sort of relatively.

• 11:41Speaker 03

  I don't want to say inorganic, and we didn't cause it, but it was not sort of sustainable growth as those things tend to be. Um, and so I think kind of the really interesting journey that we've been on has been sort of rebuilding and and exceeding. The the that sort of initial burst of growth with sort of really sustainable, um, unincentivized kind of growth that's been been continuing going strong, which has been pretty damn cool.

• 12:08Ryan Sean Adams?

  Barry, am I looking at this on the charts? This is L two B, which is a great place to track kind of total locked value of Arbitrum one. And you said, just like, you suddenly kind of opened the the gates to the the park and then bam, there's a billion dollars. Is that what we're seeing on the chart?

• 12:22Speaker 03

  Yep, exactly. Um, and the other interesting place that shows up is in. Um, this kind of transactions where you see this sort of huge initial spike and then kind of significantly lower for a while up into the point where now it's kind of rebuilding to rebuild it rebuilt to be there. So it kind of at a similar level consistently.

• 12:43Ryan Sean Adams?

  So what's interesting is I guess this is like what Arbitrum looks like in the quote unquote, uh, like great crypto bear market of 2022. And you guys are still above two billion in in market cap. And I guess it looks like I'm still leading the charts here as the number one roll up with optimism. Uh, in second place, uh, kind of close, but 2.15 billion versus 1.58 billion. I don't want to dwell too much on total locked value because I think that is somewhat, it can be like a vanity metric or it can be inflated in in weird ways, as you've just described, but seems like there's been a a pretty quick growth of the ecosystem. Um, Stephen, as you reflect on the last year, what do you think about?

• 13:26Speaker 02

  Yeah, I mean, I would agree with Harry that it's definitely not how it cannot have predicted how the year would have gone, how it went, but fantastically happy with the way that it did. One interesting piece of perspective that I'll give you. So you mentioned we were on, I think we were on September 7th of last year. And so if you look at the Nitro repository, right, where the code lives on GitHub, you'll see the first commit to the Nitro repository was September 8th. So here we are on Bankless a year ago, September 7th, talking about this brand new thing we launched. And now we're already thinking about like, you know, today's launch, right? Actually, like, we're back to work thinking about how do you make this thing better? And that's basically like, there's, you know, we're, we're super happy with the way that launch is going and the way that land and we're really, really working

• 14:11Speaker 02

  to get adoption. But we're also constantly thinking about how do you make this better? And like I tell you, we already have, you know, the initiatives, I'll probably go live next year, already, you know, working on it and constantly thinking about how do we scale? Because scaling is like a cat and mouse game. Like, we scale, and then more users come. And the man keeps growing. Ethereum demand is not going down long term at all. It's going to keep going up and up and up. And we have to stay, keep the tech ahead of that curve.

• 14:33Ryan Sean Adams?

  Stephen, as you said, Ethereum demand is not going down, it's going up and up and up. And a lot of that demand is transferring to rollups. And indeed, kind of the Bankless message over the past year since Arbitrum, many other rollups launched is like, go make your home, go migrate to a rollup, see what you like, go, go test out a few and just like kind of start to build your business there, start to, start to go Bankless on these rollups. I'm, I'm curious, though, if it's like, maybe for, for people who aren't familiar, I know if they're listening to Bankless, they know what a rollup is. You got to know what a rollup is, right, guys? But like, what, what's special about Arbitrum's specific take on rollups? Could you give us just the, the highest level? I know we've covered it in

• 15:14Ryan Sean Adams?

  detail in other places. It is an optimistic rollup. What else about Arbitrum? Would you want to tell us what's different about it? Stephen, back to you.

• 15:25Speaker 02

  Yeah, I would focus on like three things going a little deeper. Number one, like you said, it's an optimistic roll up. It's a particular type of optimistic roll up that we, you know, put forth back in our academic paper that uses something called interactive fraud proofs. And basically, that's a technical way, but what allows you to achieve is a really, really compatible optimistic rule. It's easy for people to build, particularly easy for people who know how to build Ethereum, to build, to build an Arbitrum. And you know, that's something which is, you know, really, really important to us, which is, you know, continuing to be ETH aligned, not just because we're building on ETH, also because we're community aligned with ETH and it's really easy to build. We're also very tech focused first. You know, we have a fully complete built out system and we're really, really excited about that.

• 16:09Speaker 02

  And you know, we, the system is in beta today, but all the code is there and complete. And, and the last thing that I'll, that I'll, that I'll say is, you know, the way we think about it. The Nitro launch is actually a really big milestone for us, but it also shows how we think about our roll up in which, you know, we're not married to a particular tool and say, hey, I need to use this tool. We're married to a solution. And you know, we're constantly thinking about how do we solve this? How do we do this even better? And that's something which, you know, I don't know, people sometimes say to me, hey, will you guys use this ZK? So maybe, maybe one day we will. We're definitely, you know, not against it and we're just constantly thinking about how do we scale Ethereum the best. So, you know, when I think about the futures of our, futures of Arbitrum, I don't want to dwell too much, even,

• 16:49Speaker 02

  even as excited I am about the current technology, it's really the goal that, that we're, that we're aligned on and, and the tools will definitely change over time as they did today.

• 16:58David Hoffman?

  I want to zoom back into some recent history in the Arbitrum universe. And I think going back to the beginning of the Arbitrum Odyssey, I think will actually be really helpful for listeners. Understand the significance of Nitro, because we, we did this thing called the Arbitrum Odyssey, but the Odyssey had to be put on pause. Because we didn't have Nitro yet. So I'm wondering if we, can we go back a few weeks or months back to the beginning of the Arbitrum Odyssey? Can you explain what, what was the, the Arbitrum Odyssey? What is the Arbitrum Odyssey? What was its intended goals? And then what did we learn as a result of the very beginning phases of the Odyssey? Harry, I'll throw it to you on that one.

• 17:39Speaker 03

  Um, I, I, I can, I can kind of take the, take, take a high level that I'll probably toss it back over to Stephen since, uh, since he could probably say even more than me. I mean, broadly speaking, kind of the goal of, of the Odyssey is to, to bring users into the ecosystem. Um, that sort of, I think one of our favorite things about the Arbitrum ecosystem, uh, that we wanted to highlight is just sort of how much depth there is, how many different things there are to do. Um, I think kind of toward, towards sort of your earlier point, like our goal has always been sort of, have people be able to come and stay, uh, not have people just sort of slide into the system to interact with kind of a couple of daps.

• 18:17Speaker 03

  Um, but then kind of run out of things to do, uh, but to actually have kind of a full, complete ecosystem. And I think the Odyssey kind of at a high level is very much sort of the, the effort to, to highlight that. Um, I don't know, Stephen, if you want to jump in, um, or I'm happy to keep, uh.

• 18:34Speaker 02

  Yeah, no, I think that's what I would say too. It's really about education and, and, and they know I saw, um, someone tweeted the other day and said, I, I got introduced to the audit to GMX via the Odyssey and I haven't stopped using it. And that's like a great example of like, learning about what there is to do in Arbitrum and that that was our main goal. Uh, I know there was a lot of speculation that we had other goals with the Odyssey, but really, uh, our main goal was about, uh, education and introducing users, uh, to, to the platform. And, um, yeah, that, that, that's, that's what I think, uh, which we begun to accomplish. We did put it on pause. Um, but we will continue to accomplish when we restart it.

• 19:09David Hoffman?

  I think, I think a nice metaphor to explain the Odyssey, the one that landed in my head was it kind of felt like, um, a tour of a college campus, like you, like you get everyone, heard them all together, walk them through, walk them through the campus, like, and here is our library where you can go leverage long or short on GMX. And here is our NFT museum with magic in the treasure ecosystem. Uh, and so it was like a, a, a little bit like a, a phase where like you, each week you do, uh, in each individual thing. And week one was bridge week, right? Because you know, if you're going to start an Odyssey, you need to get everyone onto the Arbitrum chain. And so week one was bridge week. And then week two was going to be the next phase of the Odyssey, but that's when we learned some things. Uh, who wants to, who wants, between the two of you, wants to walk us through what happened there?

• 19:56Speaker 03

  I'm happy to take it. Cool. How are you? Yeah, sure. I mean, essentially, sort of the thing we found was that in sort of the way that that kind of Arbitrum was pre pre Nitro, we are running at a approximately. And now we can with Nitro, we'll get into later, we can say this much more exactly, but we were running with approximately Ethereum's worth of capacity. One Ethereum of capacity? Yes. Cool. I like that. I like the scale of measurement. It's easy to understand, like one Ethereum.

• 20:27Speaker 03

  Um, no, same. Um, I think, and I think kind of the thing we found is basically that that was really easy to to be to to fill that up. Um, kind of, we've been in an interesting dynamic. We're sort of because rollups have been sort of relatively early in the stage of adoption. Um, I think for a while, people were sort of treating them as though kind of gas optimization didn't matter. Things could be sort of arbitrarily complex. Um, and that wouldn't sort of. And I think that was sort of a wake up call all around that, well, it's still a blockchain. It still has limited capacity. Um, it, from our perspective, essentially, kind of in that, in that state, we sort of

• 21:09Speaker 03

  were obviously well on our way to working on Nitro and planning Nitro and have this vision on my in mind where it will certainly be be significantly more. Um, although there's, there's always sort of this, this question, which is there's no kind of how, how much demand is there? And it's very hard to predict, and it's very hard to see. Um, I don't think we quite imagined how much demand would rush in for the Odyssey. Um, that if you look at sort of the massive spike of usage associated, it was, it was quite large. Um, I, I think sort of when, you know, it will be, it will be very interesting to see when it begins again. Um, because sort of to be, to be quite upfront about this, we're, we're going to massively increase our capacity.

• 21:52Speaker 03

  Um, we, you know, that will allow for many, many, many more users to make use of the system. There is, there will still be a number of users that that could hit limits. Um, if enough demand comes in, since it's not unlimited, um, but we can certainly stir. Hugely more people, which I think is pretty critical.

• 22:09Ryan Sean Adams?

  So, high level, Harry, Arbitrum 1 launched another Ethereum's worth of capacity, basically. And by the time the Odyssey kicked off, everything was like full. I know how you're measuring capacities, like all blocks full, something like this.

• 22:23Speaker 03

  Yeah.

• 22:23Ryan Sean Adams?

  And you didn't have enough space to continue the Odyssey. So you guys said, okay, too early for the growth phase.

• 22:32David Hoffman?

  The bus was full.

• 22:33Ryan Sean Adams?

  Odyssey. Yeah, like, sorry, guys, bus is full, tour bus is full. You know, we don't have any, any room for more, more students to take the tour, the campus tour. And you put Odyssey on pause for a period of time until you could deploy Nitro. Is that the case?

• 22:51Speaker 03

  Exactly, yeah. Effectively, sort of, in a way, it was almost kind of too successful in terms of sort of the amount of demand it created. And I think sort of, you know, the, when, when things like that occur, I mean, it's the exact same thing we see on Ethereum all the time. Well, not all the time, but relative, relatively often where some event happens, the chain becomes massively congested. Prices goes up, go up and sort of, you know, the, the rest of the ecosystem says, what's going on? Everything's more expensive. This is affecting us negatively. And sort of the thing we wanted to avoid was, was that impact. And sort of the way to avoid that impact is to have more capacity so that the system doesn't get overwhelmed.

• 23:34David Hoffman?

  And Harry, you said something that I think was worth parsing out. At the very beginning of Arbitrum 1, it was, it was like, there was so much block space. It's like, so all of these DApps could be like, oh, I'll just use all of this block space. Look at all this empty block space. I'll just use it all. And this is kind of just an inevitable truth of every single blockchain in its beginning phases is that since there's such an abundance of block space, DApp developers don't write space optimized contracts. And so like all of the, from what I've gathered, like the early days of the, of the Arbitrum DApps. They never had to be constrained in this respect. And so then, once we actually do like an actually like marketed and productized Odyssey type thing,

• 24:18David Hoffman?

  where like, okay, come and use all of these DApps. And all the Arbitrum DApp developers like, oh wait, like, we forgot to consider like optimizations. And so, not only, I'm guessing since then, a lot of Arbitrum DApps have, in addition to like Arbitrum itself growing in capacity, I'm about to ask you guys by how much capacity, but I'm assuming also the Arbitrum DApps have started to be more resourceful with their design of their contracts. Would you guys say that's true?

• 24:48Speaker 03

  It's a good question. I would say, so I wouldn't say that people didn't kind of think about optimizing. I think I would say that sort of what people were focused on optimizing was different. So for example, a lot of thought went into optimizing down the amount of call data involved, because that's the cost of posting matches to Ethereum, that's the L1 resources, that's expensive. So a lot of thought went to optimization, but essentially the, the kind of, at that point, it was a very good trade-off to make, to use more gas on Arbitrum, to use more execution gas to save money on Ethereum. And so I think, yeah, as kind of, as things have moved, I think people have sort of seen, seen those tides moving and are working on adjusting. So I definitely think that sort of people are reacting, but it's not that they hadn't thought about it.

• 25:33Speaker 03

  It's that they were kind of, had different focuses.

• 25:36David Hoffman?

  And the cool thing about that event is that all that happened was that the gas fees on Arbitrum went up. Right? Just like in the same way that Ethereum gas fees go up when there's congestion, the Arbitrum gas fees went up because there was congestion. There's alternative scaling models out there where the thing just shuts down. For, perhaps that was not, that's actually not an intended feature of some other Layer 1 blockchains, but that is the inevitable conclusion. And so the fact that like Arbitrum just mimics Ethereum in its design, I think illustrates like the, the way that Arbitrum, and when we talk about Arbitrum as like one Ethereum, another Ethereum's worth of scale, like, no, it's literally another Ethereum in, in a Layer 2, and it operates and looks the same way.

• 26:22David Hoffman?

  And so with that in mind, Stephen, do you want to say something?

• 26:26Speaker 02

  Yeah, no, I would agree with that exactly. And you know, the thing to say is Arbitrum, it worked exactly as intended, as you basically said. And to use the bus analogy, the bus tickets got expensive and there were those people that just wanted to take it on the bus. And so for us, the decision was easy because it was like, hey, we know that we're, you know, right around the corner from Nitro, we're going to increase the capacity. So why not wait so we can, you know, allow many more people on this bus. But the system worked exactly as intended.

• 26:54David Hoffman?

  Right. So the decision was made to put the Odyssey on pause. Bus is gonna hang out while we upgrade the engine. And so what, getting into the Nitro conversation, what about Nitro is like, what's the secret sauce behind Nitro? And if Arbitrum 1 previously was 1 Ethereum, how many Ethereum is Nitro?

• 27:17Speaker 03

  It's a good question. Yeah, so I mean, I'll start with the, with the second one, just because that's relatively easy. We're currently kind of live with seven, approximately seven Ethereum's worth of capacity.

• 27:33David Hoffman?

  Wow.

• 27:35Ryan Sean Adams?

  Seven Ethereum's worth of capacity. So you've just 7x this. Hey, I definitely want to know how you did that. But that's incredible.

• 27:46Speaker 03

  Yeah, no, and that's like, you know, I think a perfect transition into sort of what's the, what's the secret sauce? And I'll say sort of fundamentally, kind of the secret sauce. Well, first of all, I think in a lot of ways, kind of Arbitrum Nitro is a very classic startup story in that kind of Arbitrum 1 was effectively sort of our MVP in a significant way. It was the first thing we figured out how to build that we knew had legs and had it could work. But we also sort of knew early on, there were limitations. There were things that we wish were not the case. We didn't stick around and wait too much until we had fixed them, because if so,

• 28:27Speaker 03

  we would never have, you know, getting off the ground is almost impossible. But we had these ideas in mind and kind of fundamentally. There was a lot of various overhead. We were figuring out how to do fraud proofs on chain for the first time. Which at that point was, I think, very early and sort of people didn't really have a good figure on. And I think you see this all over the place in terms of as research develops. I know Stephen likes to talk about his PhD being a course of finding out over and over and over again that like his previous work was like kind of crappy and that there was a way better way of doing it.

• 29:05Speaker 02

  I don't usually use those words, but it's accurate.

• 29:09Speaker 03

  The latest one is great, though.

• 29:12Speaker 02

  Thank you.

• 29:14Speaker 03

  But effectively, sort of what we figured out with Nitro and kind of the core to me is that we cook a lot of kind of the custom work that we had to do in order to figure out how to solve this problem originally. And we were able to swap out almost all of that work with standard EVM. Before, we had this this complicated, this relatively complicated new system we built from this ground up. Called the AVM, which was our own virtual machine, because it was so complicated to figure out how to prove to Ethereum. That a given L2 chain was correct, that we needed to invent an entire virtual machine for it. With Nitro, we using using Geth, using Wasm, using a bunch of sort of standard powerful tools.

• 29:54Speaker 03

  We were able to basically not need to do much less custom, need to do much less with kind of lower performance tooling. And be able to effectively do what Nitro is today, which is running as a kind of full standard EVM capacity. So there's a lot of different sort of EVM chains out there. If you call sort of anything that is forked off of Geth. There are some fundamental kind of scaling constraints in the EVM world, which maybe we can talk about those a little later. But Arbitrum Nitro is essentially competitive with any other EVM chain. And the 7X is basically sort of our line for how to have sort of sustainable growth so that people can continue to run nodes over time and validate the chain.

• 30:38Speaker 03

  While having as much capacity as possible.

• 30:40Ryan Sean Adams?

  I want people to hear that. So we just 7Xed Ethereum, which is essentially what we're doing because we're preserving the trustlessness and the decentralization. I know there is still some kind of like, you know, governors on that, management pieces on that and on Arbitrum 1, but like, that is what we're doing long-term. We've just 7Xed Ethereum. Were there any like, trade-offs made in the process? Did we lose anything? Are there any added trust assumptions? Or is this all pure engineering compression, like magic that allowed us to do this?

• 31:13Speaker 03

  Pretty, pretty pure win. Pretty pure win. I would, I would say effectively, the trust model doesn't change at all with Arbitrum 1. We'll, we'll talk about Nova later there. There's some more kind of interesting trade-offs made. But this, and kind of the, I said it, I'll say again, sort of the, the amount of capacity is kind of fundamentally how only, basically limited around this idea of state growth. How much, how beefy of a machine do you need to stick the chain? This is where we decided was reasonable, which, and kind of, I think there's, we have some good reasons for that, but sort of, that's, that's the only limit

• 31:56Speaker 03

  there is. Ethereum is very conservative. Ethereum wants everyone in the world to be able to validate the chain. Because of the roll-up security model, you don't need to make anywhere near that aggressive an assumption, because you don't need 2/3 honest, you need 1 honest. And that lets us sort of exceed Ethereum in that way, which is sort of where we get that 7X from.

• 32:19Ryan Sean Adams?

  And I want to go into that bottleneck a little bit more. You said it was the state growth. Why can't we have 70 Ethereum's, Harry? Why haven't you brought in, brought in 70 Ethereum's to the table? What breaks?

• 32:30David Hoffman?

  Dave, just stop being so greedy.

• 32:31Speaker 03

  I'm working as hard as I can. I need to sleep sometimes.

• 32:35Ryan Sean Adams?

  What breaks if you turn that 7 into a 70 number? Like, why can't we have that?

• 32:41Speaker 03

  Yeah, so it's sort of, and this is kind of the same constraint that people on Ethereum, that the Ethereum core devs worry about. I mean, in terms of kind of the main reason that the Ethereum gas limit is not higher is the main reason that the Arbitrum gas limit is not higher, which has to do with effectively how much memory your computer needs to be able to actually hold the entire current state. Since effectively, in order to execute the blockchain quickly, you need to be able to quickly read any storage cell, any contract code, anything that kind of could be immediately relevant. You need to be able to hold that in memory, or you need to take a long time reading the disk and you can never process this quickly. And that's kind of the fundamental limitation there.

• 33:22David Hoffman?

  So the, so the state of Arbitrum, which is different than the most recent block, the state of Arbitrum is, needs to be held in a computer's RAM. How, do you know, is the current state size of Arbitrum? Like, how much, how much RAM do you need to be able to read this thing?

• 33:39Speaker 03

  Um, I think currently, we're somewhere, it's definitely under 10 gigabytes. I'm pretty certain, yeah.

• 33:48David Hoffman?

  That seems modest.

• 33:49Speaker 03

  It will, it will increase over time. And effectively, sort of the, the reason for the gas limit is, we could crank up the gas limit to 70x probably, and it would be fine running nodes for the next year. But a year and a half from now, it would start to get really, really hard.

• 34:07David Hoffman?

  Right, we would start to need like 100 gigs of RAM to be able to manage this thing at that point. And at that point, we're like, oh, we have, we've gone beyond the capacity of what can be expected.

• 34:16Speaker 03

  Exactly. It's about controlling the rate of growth over time, so that sort of the rate of hardware getting better keeps up with the rate of the chain getting harder to run.

• 34:25David Hoffman?

  And how, just again, some basic bare bone scaling stuff. Why is that different than Ethereum? Why are you guys able to scale faster than Ethereum when Ethereum has that same constraint?

• 34:36Speaker 03

  It is identical to Ethereum. So all of this comes down to basically Ethereum makes some very aggressive choices about making it very easy to run a node at home. It's very important to Ethereum that kind of you at home validation is is is easy to do that you can validate on a Raspberry Pi. And these are like important values and they're very important for Ethereum because you have proof of stake or even with proof or either way where you need to assume that you have a lot of honest people there who are able to participate in the system. It needs to have a low barrier to entry. Rollups can can sustain a significantly higher barrier to entry because you only need one honest person.

• 35:16David Hoffman?

  Right. So Ethereum needs like two thirds of the nodes to be able to have sufficient RAM and Arbitrum or an optimistic rollup just seems like, well, we kind of just need one honest person with sufficient RAM. And that's where we get that scale from?

• 35:30Speaker 03

  Yes. So

• 35:31David Hoffman?

  Simplistically, reductively.

• 35:33Speaker 03

  The reason to not do the 70x is because you need more than one because you need all the infrastructure. You need blockchain explorers to work. You need you need sort of all sorts of tooling, indexers, automation tools, all of that. That that's sort of where we get the limitation from.

• 35:49David Hoffman?

  Okay, we need to make sure that EtherScan can keep up with Arbitrum and Infira can keep up with Arbitrum. But but the idea is that the number of entities that need to keep up with Arbitrum is significantly reduced and we are able to reduce that number without breaking our basic trust assumptions of the Ethereum layer one.

• 36:06Speaker 03

  Yeah, exactly.

• 36:07David Hoffman?

  Every time I had talked to rollup teams, I'm like, okay, I have to go and like remind myself about the basic like theory behind every single layer one because like it's hard to keep in my brain from from month to month to month. When one last question on this train of thought, when we say that Arbitrum Nitro is now seven Ethereum's, what nuance is lost when we explain it that way? Like what engineers did we just trigger by explaining Arbitrum in that particular mechanism?

• 36:35Speaker 03

  No, that's a good question. So there's, I guess there's two things I could say for that. One is interestingly, we don't measure our gas in blocks because of sort of how Arbitrum block production works, where sort of blocks are produced quickly. We instead measure it in gas per second. So that equivalency is based on sort of what the Ethereum block time is, and sort of doing, doing some division there in order to calculate that. That's a relatively minor one. The other sort of probably more interesting one is that there's two independent resources that Arbitrum consumes. 7X is the amount of addition, of amount of L2 resources we have. But also, when you're using Arbitrum, you're using Ethereum resources because of

• 37:16Speaker 03

  how transactions get posted on chain. That we actually are also improving with Nitro, because we're introducing additional compression. But that's sort of not in that same category of 7X and is measured totally separately.

• 37:32David Hoffman?

  Okay. Okay, beautiful. Okay, so we've got, we've got Arbitrum Nitro, right? Ryan, do you have a question before? Yeah, go for it.

• 37:38Ryan Sean Adams?

  I do. I just, before you get to kind of like, you know, the resuming odyssey and such, I, I just want to spend a minute to zoom out, right? So we, we just got a 7X. And like David, I'm, I'm real happy about that. But I'm also kind of like David, I'm real greedy too. And like, the question in my mind is, what's the next step from here? Just curious. So can you get another, you know, 7 to 10 X out of like, better engineering in the next version, compressing it some more? Are we like, we had an episode with Palenia recently, where we talked a lot

• 38:15Ryan Sean Adams?

  about EIP 4844 and proto Dank sharding, and what that provides to rollups, which is really inexpensive call data, which is a key to scaling rollups, as I understand. But if you just like, you know, tell us what this will look like next year on Arbitrum one's second birthday? Kind of scalability increase could, could we see there? And then like, on Arbitrum's third birthday, when it's just like, you know, just a toddler and it's walk, it's just learning to walk and it's, you know, flailing around. What, what does that look like? Because that's probably a post EIP 4844 world. Any thoughts on this, Harry?

• 38:58Speaker 03

  Yeah, this is, I mean, this is like the tough question. Um, I'll say, you know, to start with the easy one, which is that sort of 4844 is like hugely valuable and important. But it only, but what it solves is essentially further decreasing those L1 costs. So between the new compression in Nitro and 4844, those costs, I think we can expect will get very, very small. And then you basically are left with sort of the main cost of using Arbitrum being paying for this L2 capacity in this chain with kind of 7X Ethereum capacity. Um, that's the relatively straightforward one. The complicated one is then, well, what about that chain's capacity? And I think there's sort of two things I can say there.

• 39:42Speaker 03

  One is sort of, I think you've seen today and we'll talk more later, probably about Nova. Uh, and you can see this idea of sort of multiple parallel rollups. Nova has 7X Ethereum capacity. Arbitrum 1 has 7X Ethereum capacity. They don't take capacity from each other. They're totally independent. So between the two of them, we have 14X Ethereum capacity. Um, that is sort of relatively simple to do from a technical perspective. From an ecosystem perspective, it's much more complicated because these are separate chains with separate DApps and separate code deployed on them. Um, but that's the one that kind of like, you know, you can clearly picture today. I think beyond that, you get into these sort of fundamental considerations of how do you scale the EVM better?

• 40:27Speaker 03

  Um, how do you sort of actually do that? I think all of those go down the line of, well, there, the EVM itself has to change to some degree. Uh, and these are, these are questions that kind of core Ethereum researchers have been struggling with one way or another for a while. And I think very much kind of we are, we see ourselves among them. Uh, that fundamentally kind of how to scale Arbitrum and how to scale Ethereum are basically sort of, Ethereum's computational capacity will be sort of the same question. Um, because they're operating under the same constraints. And I think that there's kind of going to be a lot of interesting stuff evolving on that front as sort of the research community really kind of aligns around that question.

• 41:09Ryan Sean Adams?

  But every like Arbitrum birthday, can we count on you guys to give us another like 7 to 10X or something like this? Steven, what do you have to add to this? I think we have some promises, my friend.

• 41:18Speaker 02

  I think we have a few more 7 to 10Xs with us. I can tell you this, we have. Just like Nitro started a year ago, you know, that production repo, we have several other really, really promising efforts. You know, to Harry's point, some of it's going to be fundamental, some of it, but I do think there's still, I don't think we're at the optimal point yet. And I would expect that we'll, we'll deliver once again in the next year. I can't tell you which of our various efforts will be the one, just like, you know, when I just started, it wasn't, it wasn't the only thing. Nitro started one as a one-person project and slowly became the company priority. So one of these various efforts that we're running will probably over time dwarf the others. But I'm pretty confident that we have, we have some, a bunch more scale to squeeze out of the system. And then do more fundamental things as well.

• 42:03Speaker 02

  But long-term, I'm pretty bullish and yeah, I'll put a reminder for one year, but I'm pretty.

• 42:10Ryan Sean Adams?

  I need the calendar invite.

• 42:12Speaker 02

  There you go.

• 42:12Speaker 03

  Fully agreed. So I think I fully agree. And I think my main point there was sort of like, it's, it's ways that you start to drift a little bit from the EVM while maintaining the user experience essentially that like sort of that you start to look at like around the edges. How can we like poke at this thing, prod at this thing to sort of keep the user experience as similar as possible? But do things in ways that, that are, that are more scalable.

• 42:37David Hoffman?

  So guys, what happens next? Are we, when, when does the Odyssey resume? We get back on, on track with the Odyssey? When does that happen?

• 42:44Speaker 02

  So we haven't announced an exact date yet. We don't have an exact date yet, but it's, we'll come, it will resume in short order. We'll want to see the system, like we said, today went on, went on without a hitch, but we want to give it, you know, a little time to stabilize before we really, really bring in even, you know, a large mass, a larger mass of users. Although we have seen some pretty high, you know, transaction volumes today. And we actually just at the start of this call, hit our 25 millionth transaction. So that's, that's exciting.

• 43:12Speaker 02

  But yeah, so the Odyssey will definitely restart in, in short order and we're excited for that.

• 43:18David Hoffman?

  25 millionth transaction. Do you, off the top of your head, do you know how many transactions the Ethereum layer one has had?

• 43:25Speaker 02

  A whole lot more than that, but I don't know off the top of my head, but.

• 43:28David Hoffman?

  More than that. When, when, when will you pass Ethereum?

• 43:32Speaker 02

  Well, remember, we were only running at one Ethereum's capacity.

• 43:35David Hoffman?

  Right, right. So actually, up at now is the actual point where you can actually chase Ethereum and actually catch up.

• 43:41Speaker 02

  Exactly. Now he's low capacity, you know, if we, if we're at capacity in a year, well, well, seven years, do seven years of Ethereum. So now's the time where that, where that rate actually happens, that becomes feasible.

• 43:52David Hoffman?

  Okay. Over, under one year from today, will you have a total transaction count higher or lower than Ethereum? And what's it gonna be? Cause Ethereum's been at seven, it's seven years old. And so, you know, can you guys squeeze in seven years of transaction history inside of one year with seven Ethereum's? Like, I think the math checks out.

• 44:11Ryan Sean Adams?

  We're putting a lot of pressure on this.

• 44:15Speaker 02

  We'll see what we deliver. I'm looking now Ethereum's done 1.6 billion transactions. So we still have, have a ways to go to catch up to that. And, and our goal honestly isn't, you know, isn't even to catch up to that. Our goal is to meet the demand and continue to increase the demand that we have. And we're confident that we will meet the demand for the next year. And when we come back in the year, we will scale our tech to meet even further demand.

• 44:39David Hoffman?

  So guys, I told the chat that if they could get 50 likes in the next 10 minutes, then I'd ask about the token. And they've got about four minutes left to get 20 more likes. So we'll see if they can make it, but there's plenty of other things in the Arbitrum ecosystem that we want to talk about. We already talked about Arbitrum Nova and we want to dive into that a little bit more. Also just what's hot in the Arbitrum app layer? I want to get your, your perspective on your guys' favorite DApps and ecosystems there. And maybe if this chat can get these likes underway, we might ask about the Arbitrum airdrop as well. So we're going to do all of these things and more, right after we get to some of these fantastic sponsors that make the show possible. Juno is bringing crypto-friendly banking straight into your checking account. With Juno, you can send money from your Juno checking account straight onto a layer two, like Polygon, Optimism, Arbitrum.

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• 47:30Ryan Sean Adams?

  Alright guys, we are back with Harry and Steven from Arbitrum. We're talking all about scaling Ethereum. They just brought us seven Ethereum's worth of scale with the launch of Arbitrum Nitro.

• 47:42David Hoffman?

  They brought us seven Ethereum.

• 47:43Ryan Sean Adams?

  Which is awesome. And we should be grateful for that. I'll remind my co-host David, we should be grateful for that, even though we want more. But actually, there is more, in a way. Want to start talking about another chain that you launched called Arbitrum Nova. And I remember when we first talked to you guys a year ago, September of last year, it was kind of news to me that if there was an Arbitrum 1, there could also be an Arbitrum 2, or an Arbitrum 3, or an Arbitrum 4. The Arbitrum 1 wasn't just necessarily one chain. Arbitrum is a technology that can be used across multiple chains. And so now we have Arbitrum 1, which is getting some NFT usage, also getting a lot of DeFi usage.

• 48:28Ryan Sean Adams?

  Now we have this other chain that you've launched using Arbitrum Tech Stack called Arbitrum Nova. This is the brand new Layer 2 chain. What's the big deal about Arbitrum Nova? Like, what is it exactly? There are some trade-off differences, I think, from a trust perspective. Maybe you could describe that? And what kind of use case and set of users are you going for on Nova? Steven, I'll throw it to you.

• 48:54Speaker 02

  Yeah, Arbitrum Nova is built on the Arbitrum AnyTrust technology and uses what's called a data availability committee. So, most of the tech actually looks like a roll-up. Actually Arbitrum Nova is already running the Nitro stack, so we did that launch with Nitro right off the bat. They're both running the Nitro stack now. The difference is, whereas on the roll-up Arbitrum 1, we put all the data on Ethereum, in Arbitrum Nova, we don't put all the data on Ethereum. Instead, we send the data to a data availability committee. But the rest of it, the fraud proofs, all happen, does happen on Ethereum. That's the core difference. But remember, At least for the current time, until we have like EIP 4044 or similar initiatives, the vast majority of our costs is that data posting on Ethereum.

• 49:36Speaker 02

  And so when you are able to send the data to a committee instead, the cost is significantly, significantly reduced. So what is Nova, who's it for, like, why are we doing this?

• 49:46Ryan Sean Adams?

  Before you go there, Stephen, I just want to jump in and just do a little like a bankless professor kind of like thing to try to describe that and link that. So we did an episode called the Modular Blockchain where Dave and I attempted to explain all of this. What you just talked about is there are really three parts of a modular blockchain, right? So we've got the consensus layer, innermost layer, and then we've got the data layer, and then we've got the execution layer. The way I think about this is the execution layer is on the outside, and that's what's happening now. It's kind of current state execution. The data layer is what's already happened, and the consensus layer is what's true.

• 50:25Ryan Sean Adams?

  Ethereum in a layer two, in a rollup like Arbitrum, Ethereum, Ethereum remains the consensus layer. It determines what's true, you know, it comes to consensus on that. That's why we say rollups are secured by Ethereum. And then Arbitrum is doing the execution layer. That's all the EVM stuff where you run your apps. But it's also posting its data on Ethereum and using that data layer. So it's using Ethereum for the what's happened and what's true. And that's what Arbitrum 1 is using today. Now Arbitrum Nova is different. It's still using Ethereum for the consensus layer, that innermost layer, but it's using a different data availability committee, as you called it, Stephen,

• 51:09Ryan Sean Adams?

  rather than posting on Ethereum for that data layer, the what's happened layer. And it's still using, of course, Arbitrum technology for the execution layer. Is that, is that about right? Did I do that okay?

• 51:20Speaker 02

  Yeah, that's that's exactly right. And yeah, it uses that committee, though, in a, you know, just like you said, in a pretty limited way, uses it just for the data, but the rest looks just like the roll up. And actually, it has an affordance built in Nova that if the committee stops doing what it's doing, it stops posting data, it just turns into a roll up. It literally reverts back to a roll up and starts posting data on Ethereum. So the committee, basically, the committee's role is if it functions right, it keeps the transaction fees low. But if the committee stops functioning, the chain becomes a roll up. And actually, you know, here's an interesting nugget, which we don't really talk much about, but it's definitely possible. Like, if EIP 4844 delivers and further data sharding delivers and like data on Ethereum becomes really, really cheap, maybe someday Nova just becomes a roll up and we stop using the committee

• 52:05Speaker 02

  because it's just cheap enough to use Ethereum, even for the Nova applications.

• 52:10Ryan Sean Adams?

  So if the data availability committee goes away, just reverts to a roll up, and that just means makes it more expensive, right? Because it starts using Ethereum for data availability as well. Is that correct?

• 52:20Speaker 02

  Exactly. So the committee is important in keeping the fees low, but fundamentally, the chain's liveness, even if the committee disappears, the chain will continue to operate, just like a roll up will test.

• 52:30Ryan Sean Adams?

  Dude, I didn't know that part. That's pretty fascinating. So, and this would be called a validity, I guess, if some people are using that terminology, would you call it that? I don't want to get too in the weeds, but.

• 52:39Speaker 02

  Yeah, so the ZK, the ZK solutions, ZK rollups and optimistic rollups, ZK solutions with data availability committees are called validity. So this is the optimistic analog of a validity. Yes.

• 52:51Ryan Sean Adams?

  You got it. Very good.

• 52:53David Hoffman?

  I really like this model where if it breaks, it just reverts back to its normal form, because that's how we've described rollups in Ethereum, where like if the roll up itself breaks, then it just reverts back to you'd make an Ethereum layer one transaction. And so it kind of feels like it's like nesting doll of scale, or like this inception of scale.

• 53:14Ryan Sean Adams?

  Fractals.

• 53:14David Hoffman?

  Fractals of scale, right? Where like, if the most performant but centralized layer breaks, then it goes back to a little bit more decentralized, with a little bit more cost. And if that layer breaks, then it reverts just back to the Ethereum layer one with a little bit more cost. And I think that is really emblematic of not compromising on Ethereum security. And that's really what this means, is that if you don't sacrifice that, then you just ultimately revert back to the thing, the layer below it that is still working. So it's a really elegant solution here.

• 53:43Speaker 02

  Yeah, and it does add a little bit of trust because it has the committee in that case where it works. But we think, so we think, you know, it's well, well worth it. And it also, it's, it's any trust, which means you don't need to trust the entirety of the committee. You need to trust one or two members of the committee. So when we came out the door, the committee is actually quite strong and includes us, Reddit, FTX, ConsenSys, P2P, QuickNode and Google Cloud, actually. So you have like Web 2 giants and Web 3 giants participating in this committee. And a user just needs to say, I trust that one and I don't care. Maybe I don't trust that anyone else, but I trust that this one or two committee members are doing their job. And that's how the anti-trust technology works, that you really have to have pretty trust minimized in the committee, plus trusting Ethereum and everything works, you know, quite well. Is it exactly a roll up? Does it have the full security of a roll up?

• 54:28Speaker 02

  No, there is value of putting this data on Ethereum. But I think that Nova, you know, occupies a very special place where it gives you a high security chain, but also ultra-low fees. And again, the ultra-low fees come from the fact that you're not putting all that data on Ethereum, and that's a significant cost reduction.

• 54:46Ryan Sean Adams?

  All right, so the ultra-low fees piece of it. And when you said the data availability committee, like two, two names popped up in my head that, oh, these people are in crypto. One is Google Cloud, which is interesting, but it makes sense that they'd be there for infrastructure purposes. The other is Reddit. Reddit, the social media website, social media giant, 450 million daily active users. That Reddit is what we're talking about here. Okay, so, and they're also doing stuff with Arbitrum. And I think Arbitrum Nova specifically. What are they building on Arbitrum Nova?

• 55:22Speaker 02

  Yeah, so they are, as you said, both part of the infrastructure and helping run the data committee and also building on the chain. What they're building is called Community Points, and it's really, really cool. And actually, going back, and I've been in the blockchain space for a bunch of years. I remember like, this was one of the early things people talk about. Wouldn't it be cool if Reddit like? You know, did their their point system on the blockchain. And what community points is, it's live in, you know, particular subreddits today, is a point system where you participate in the community, you comment, you you upload, etc., and you get these points, which are actually blockchain tokens, delivered on Arbitrum. And and the reason why that's, you know, so cool is because now users have self sovereignty over these points. So no longer can Reddit say, hey, I'm shutting down your account, and now you lose your points.

• 56:07Speaker 02

  Users actually keep those points and they control those points. They're not controlled in a centralized database. It's actually pretty, pretty forward thinking of Reddit to to offer this to users and to somewhat give up this control over these points, but it's also very, very, very powerful. And, you know, the reason why it's powerful is because it's an open ecosystem, it's on Arbitrum Nova, and anyone else can launch an app here as well. I can launch a game. And the currency in my game are these Reddit community points, right? That's something which I can totally do. So you're not only having the, you know, Reddit's foundational, you know, community points here, but you actually can have an ecosystem that builds around community points, you know, which is powerful. And and Reddit is very for, you know, forward thinking. One thing, you know, that that I think is a bit different from in 2017,

• 56:52Speaker 02

  there was a lot of, hey, let's put this industry on the blockchain. Let's like, take all your health records and put it on the blockchain. Terrible idea if you ask me, by the way. Now it's like, no, we're not putting Reddit on the blockchain, because it makes a lot of sense for Reddit to be a web two company. But is there a way that the blockchain can help Reddit? Is there a piece that it makes sense? And, you know, even though it's minimalistic compared, hey, let's put Reddit on the blockchain, it's a lot more thoughtful and it actually makes sense. And that's why I think it's so cool. It's a sign of maturity of this tech.

• 57:20Ryan Sean Adams?

  Yeah, it's also a sign of maturity that I don't think, you know, to its users, Reddit is saying, this is now our points are on the blockchain. Right? It's kind of like happening behind the scenes. And it's sort of the the infrastructure behind this point system too, which is really neat. And like, yeah, I guess when you have an open economy like this, you can imagine all sorts of different use cases, like, you know, taking shape, like the, the, you know, keyboard warrior Reddit moderator who's like, spending a lot of time. Moderating, earning those points, getting those upvotes, right? Now they can use DeFi with those points? Take out a collateralized loan on your Reddit community points? Like, how crazy is that? How cool is that?

• 58:04Ryan Sean Adams?

  And that's what we're talking about unleashing because Nitro, of course, can be bridged back to Ethereum, or you can bridge assets from Nova back to Nitro, for example. So we've just unlocked the entire Ethereum economy for something like Reddit points. I imagine they're probably planning a slow roll on this. They haven't done this across all of their subreddits. But can Nova actually handle the scale of something like Reddit?

• 58:34Speaker 02

  Yeah, so they have done this. It's in two communities now, but definitely Nova can handle a lot, a lot more than that. And yeah, I do think Nova is well positioned to handle the capacity of Reddit here and others building in Reddit's ecosystem. And actually, this is to me, it's the vision. People, you've probably heard people say like, oh, let's get the next billion users on the blockchain. And how do we do that? It's not by me going on Twitter and like finding a billion users to install MetaMask and try something out. It's by tapping into these existing communities. And so, yes, I think we're actually with Arbitrum Nitro and Arbitrum Nova, both on the Nitro stack. I do think we're at that point of maturity where we can actually handle the scale.

• 59:16Speaker 02

  We can say, hey Reddit, or hey, you know, to the reddish of the world, we're ready for your user base. You can onboard your users onto the blockchain, many of these users for the first time. But once they come, they'll probably stay and do something else, or at least many of them will. And absolutely, you know, I do think we're ready for that. And we'll continue to expand our capacity on our next birthday.

• 59:35Ryan Sean Adams?

  Yes, next birthday, a lot of pressure for that. I know David's got something to say, but I just want to underscore for the audience, because you mentioned 2017, like, this is such a sea change from what we saw in 2017, right? So we have Reddit now using underlying blockchain technology, right? We also had Facebook, Meta, adding blockchain NFT tech to Instagram and like Facebook.

• 1:00:00Ryan Sean Adams?

  Like, it's happening. It's finally happening. And in 2017, if we could, like, if you had told me in 2017 that Meta, like Facebook, Instagram, and Reddit would be using the blockchain today, using Ethereum today, I would have been like, blown away and over the moon bullish and like, probably would have bought a lot more ETH at that time, Dave. But you gotta say something.

• 1:00:25David Hoffman?

  Well, Ryan, you said earlier, something about moderators collateralizing their community points and doing stuff in DeFi with it. And maybe the listener heard that, was like, that's crazy. Why would they ever do that? I would like to let some listeners know who perhaps haven't heard this story, but this has actually already happened with Reddit, our ETH trader, Donuts. And so there's already been a token-enabled subreddit that put donuts into Uniswap and had a very liquid, relatively liquid donut pair. And it's really up to the community to figure out the financialization of their own token. So like, well, that might have been like, oh, that's a crazy concept. That's just out there. It's actually already been done before.

• 1:01:06David Hoffman?

  And so I think that this was really just one of the early use cases that was actually shown to Reddit that some communities are like, ready and able and willing to like, lean into some of this weird crypto stuff. And so it's probably where Reddit got some of these ideas. But Stephen, here, I want to ask you about, like, does this super cheap and super low gas data costs of Arbitrum Nova, is this at all competitive with like a ZK rollup? If we are adding like another order of magnitude of cheapness of the data for Arbitrum Nova, why would a ZK rollup, like, how is a ZK rollup relevant to this?

• 1:01:43David Hoffman?

  Or would a ZK rollup be able to do this? And is something like a data availability committee that Arbitrum Nova has competitive in that same sort of landscape as a ZK rollup?

• 1:01:55Speaker 02

  Yeah, so I'd say similar to what we touched on before, that if I was, you know, apples to apples, I would say the optimistic roll up is competitive to a ZK roll up, at least in terms of technology. I'll talk about like cost in a second. And Nova or the AnyTrust technology is probably analogous to the ZK roll ups called Validium. So that's probably how I would, I would say that. And basically what Validium is, is ZK proofs plus data off chain. So that's in terms of cost, I, you know, I think, I think that they're actually going to be relatively cost, cost compatible as well. I think, you know, my, my personal take is, and at least from everything I've seen to date, is optimistic roll ups will be cheaper, at least for a long time, than ZK roll ups. And if you take all that data and put it off chain,

• 1:02:40Speaker 02

  then I think the same thing will hold for Nova to Validiums as well. So, you know, there, there's a tendency some people have is to say, compare Arbitrum today to, you know, some future ZK roll up in the future, that, that, you know, but in terms of systems that are live today, and you know, we have a lot of birthdays in store. And that's, you know, it's important to remember, which is the same way, you know, we will, our future will not look like today, today either. So I think today Arbitrum Nitro is the cheapest and most compatible general purpose roll up that exists across ZK and Optimistic. And I think Nova will hold that spot for, for data availability chains.

• 1:03:19Speaker 03

  And are there any, sorry, go ahead, Harry. Oh, yeah, no, I just wanted to jump in and add there because actually I want to, I want to disagree with Stephen and say Nova is way better. Because basically, sort of the, the big, the big thing that Nova has over, over Validiums is that there's sort of, Validiums have to do proofs. Validiums have to generate these big expensive ZK proofs that take a lot of computing power. And that like in the roll up space, there's an argument that it like kind of there, there's some compression advantages. There's sort of some trade offs, you can say, well, they can do more computation, but then they can avoid posting some data. For Validiums and AnyTrust chains where data is cheap, that's just a really clear, clean win

• 1:04:04Speaker 03

  for, for, for AnyTrust chains that sort of, there isn't any, that there's this big expense that Validiums have that Nova just doesn't have.

• 1:04:13Ryan Sean Adams?

  There you go. That's Harry thrown down. Bring it. Bring it. CK Rolex.

• 1:04:18David Hoffman?

  So guys, let's zoom back out into the app layer of Arbitrum. We're still calling this thing Arbitrum 1, not Arbitrum Nitro. This is like the Nitro upgrade to Arbitrum, right?

• 1:04:28Speaker 02

  Yeah, so I think before we have Arbitrum Nitro is the software stack that's actually powering both Arbitrum 1 and Arbitrum Nova. And admittedly, very, you know, I'm sure confusing this. Thank you for clarifying that.

• 1:04:39David Hoffman?

  Right, right. Okay. So on Arbitrum, the Arbitrum that people know and love and use mostly, the Arbitrum that they're familiar with, the app layer is pretty damn robust. We had the Treasure ecosystem founders on for a very high-energy

• 1:04:55David Hoffman?

  interview that I did with them. There's also GMX, which is definitely taking crypto Twitter by storm. Overall, like what else is going on in the Arbitrum app layer that really gets you guys excited? I know you're not allowed to pick favorites amongst your children, but is there any dApps that you guys particularly enjoy or are you sort of?

• 1:05:15Speaker 02

  Yeah, you know, I think you hit on some of the big ones, which is of course Treasure, GMX, but there are some others that are really, really, I'm for sure going to miss somebody, so I apologize in advance to all those people, but like, you know, particular ones that I'm excited about are also Mycelium, FutureSwap. Also, you mentioned GMX, Umami, Vesta, you know, and the theme here is, you know, there and of course, all the layer one, like DeFi apps, you know, Uniswap, SushiSwap, you're right there too. But the cool thing is that we're enabling something like the DeFi 2.0 that they almost, it's interesting, they almost use the DeFi 1.0 as infrastructure, right? Like they'll build, you know, tap into Uniswap pools and SushiSwap pools.

• 1:06:00Speaker 02

  And that's, you know, something which we really enable that to me, there are really two exciting things about the app that we enable in Arbitrum. One is doing Uniswap cheaper, and that's really important because, you know, traders, retail traders who were priced out before can now use Uniswap and they can do $100 trade and the fee doesn't like dwarf the purpose of the trade. But then there's also like the GMXes are things that you couldn't do this on on layer one. The transactions are just too large and expensive, but really, really great product that you can do on layer two. So those are the things that I'm most excited about and I fell through the, fell into the trap of listing some names. And I'm sure I will get in trouble for this later, but I'm excited about all of our children, as you.

• 1:06:41David Hoffman?

  Steven, Harry, has the treasure community gotten you to do an E yet?

• 1:06:49Speaker 02

  E?

• 1:06:50Ryan Sean Adams?

  What is this? Wait, what is this? What is an E?

• 1:06:53David Hoffman?

  I don't know. It's an internal meme to this community. I don't know how it came about. They had me do it on the livestream, too.

• 1:06:59Speaker 02

  I don't know how it came about either.

• 1:07:02Speaker 03

  I think I made a bad pun on Twitter the other day where they're talking about gaming and instead of AAA, I said triple E.

• 1:07:11David Hoffman?

  Okay, guys, so hypothetically, if there was a token to be associated with Arbitrum, what would its ticker name be? Just out of curiosity, what would you call the ticker name?

• 1:07:22Speaker 02

  Yeah. It's a great question. I don't know the answer to that question. Maybe some users in the comments have some suggestions. I'll read them.

• 1:07:29David Hoffman?

  So I thought of like arb, because arb's like arb for arbitrage, capturing the arbitrage name as your ticker name would be pretty cool, but Arby also just sounds fun. I don't know.

• 1:07:39Speaker 02

  How would you spell Arby? Would it be A R B I or R B? That's a...

• 1:07:43David Hoffman?

  R B I.

• 1:07:45Speaker 02

  Or would you just like R B, right?

• 1:07:47Ryan Sean Adams?

  I know. It's not like A R B Y, like Arby's.

• 1:07:51David Hoffman?

  Right.

• 1:07:52Speaker 02

  Two letters, R B.

• 1:07:54David Hoffman?

  And if I was this hypothetical token, when would we learn the name of this hypothetical token? Like, when would we learn about this?

• 1:08:03Speaker 02

  So let me tell you this, actually, because it actually relates a lot to our launch today and what we're doing. Our team is tech-first, and that is the most important thing for us. And the reason for that is because, you know, I think you share this belief. We're not building tech for, you know, we're not trying to win in a week or a month. We're trying to build tech for decades and generations. And we think it's going to be really foundational for a very, very long time. So getting the tech right first, you know, even before we think about any of these questions. Having mature tech is critically important to us and the most important to us. So we wouldn't really even honestly engage with this. You know, before, say, our tech is mature. And the good news is Arbitrum Nitro definitely goes a long way to...

• 1:08:45Speaker 02

  The maturity of our tech and now, obviously, we do want to, you know, continue on the path of decentralization of our protocol. So we will be engaging with these and thinking about these questions very, very strongly. But to us, it is tech first and the tech, you know, the good news is that the tech is pretty mature now with the launch of Nitro. So I have nothing specific to share today on that. Unfortunately, only to say that, you know, now that the tech is out of the way, some of these questions of how do we decentralize? How do we involve the community more in the protocol become very, very important to us? And we will definitely consider various options there.

• 1:09:28Speaker 02

  And we will, you will absolutely be first to know when we have anything to announce. But we do have some really cool initiatives that are that are coming up in plans, please.

• 1:09:37David Hoffman?

  Beautiful. What about the remainings like, so we got Nitro out the door. So now like Arbitrum is now seven Ethereum's. So like check that box of scale for Arbitrum. What are the other like checkboxes that are really on the list that you would consider on the path towards maturity for Arbitrum tech?

• 1:09:58Speaker 02

  Yeah, so Arbitrum has, you know, we call it running in beta mode today. And what that means is a few things, we have some checks and guardrails in place around things like who can validate and who can do that. It's actually not just just us anymore. There are some others involved, the Ethereum Foundation is validating, but opening that up and continuing to do that is you're going to see more of that in relatively short order. Exciting announcements coming there, so some some alpha.

• 1:10:24David Hoffman?

  Is that, is that the same conversation as decentralizing the sequencer?

• 1:10:29Speaker 02

  That was my next point, decentralizing the sequencer. So that's more further, that's decentralizing validation, decentralize the sequencer is the idea of.

• 1:10:40Speaker 02

  The sequencer is relatively limited in what it can do. Like if the sequencer, it can't censor because there's a force on a layer one. You can just post a transaction to layer one. It can't like post a bad transaction. The only thing the sequencer can do is reorder transactions or extract MEV as the term is. We run the sequencer today and don't do that. We process transactions in the order they come in, but decentralized the sequencer is a way to say, hey, how can we have many people running the sequencer? So logically, there's one sequencer, but under the hood, it's a bunch of people running this and you have run this with a protocol that is called fear ordering. And it's something that I worked on during my time at Cornell. A fear ordering BFT protocol or fear ordering consensus protocol that says, hey, we're running the sequencer in a way that it can't reorder transactions. So really try to minimize MEV.

• 1:11:25Speaker 02

  So that's something which is also coming up on our roadmap in pretty short order and have some really, really good initiatives running internally there as well.

• 1:11:36David Hoffman?

  Well, you guys have certainly been hard at work for a very long time and it's obvious from the energy in this chat here that the community that you have corralled around your protocol is also just big fans. And with the robustness of both the DeFi and the NFT ecosystem on Arbitrum, the future looks very bright. So onwards to birthday number two.

• 1:12:02Speaker 02

  Looking forward to it. Thank you so much for having us.

• 1:12:05Ryan Sean Adams?

  Steven. Always such a blast. Yeah, it's been great to have you guys. So thank you so much. And David, what I heard from this is when token, when the tech is mature and the tech is almost mature enough. That's what I heard.

• 1:12:18David Hoffman?

  Got to go, got to finish puberty and we're going through puberty as we speak. Yeah.

• 1:12:22Ryan Sean Adams?

  There we go. And of course, guys, if you want to get started on Arbitrum, actually, the Bankless Newsletter, which is a fantastic newsletter that you should subscribe to, recently posted an article about how to get started. An Arbitrum includes the Arbitrum Starter Pack. So that will guide you there. And we do encourage, of course, you guys, as we're exploring the frontier together, go explore a rollup. A layer one is not enough anymore. You need to think about migrating to a rollup. And Arbitrum could be one of those that you consider. As always, risks and disclaimers as we close. ETH is risky, so is crypto, so is DeFi. You could definitely lose what you put in, whether it's on layer one or a layer two. We're headed west. This is the frontier.

• 1:13:05Ryan Sean Adams?

  It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.